Robin Griffiths - Exponential Move in Gold & Silver

The following comment displays an implicit understanding of the historical tendencies in the gold and silver markets. A plateau move will commence once the upper trading channel is broken (and likely tested) as support. This brings 1400 to 1450 London pm fixed as a critical zone.

Gold London PM Fixed:

When asked about silver being overbought Griffiths stated, “When you look at these things from a technical point of view, they usually go into a sustained uptrend. Then when they are getting near the end they go exponential, and gold has not yet gone exponential. It would need to be above about $1,450 before it went into the exponential phase. And of course when that happens, silver should go exponential on the exponential.”

The U.S. dollar bulls might want to review this comment as well.

Ahead of the Fed announcement on QE, King World News interviewed one of the top strategists in the world, Robin Griffiths of Cazenove Capital. When asked about QE 2, Robin stated, “The fed would appear not to be going to blink, it’s going to keep printing dollars, and almost all of the cross rates on the currency markets are saying, ‘The dollar is toast, the dollar is really toast.’ There’s no sign of a reversal there.”

Source: kingworldnews.com

A Dunkin’ Donuts Store Exhibits Penny Sanity

Ironic how bypassing pennies, which is an indirect admission that currency devaluation has depreciated their purchasing power transactional utility, is viewed as sanity. Yet, the same public would likely characterize the devaluation of currency (coins and bills) for the protection of the financial system that protects the few over the many as an insane policy. Those that act like sheep tend to be treated as such in the game of money.

One Dunkin’ Donuts store is taking a stand against the penny. A sign at the store reads “We will be rounding your change to the closest nickel. For example, if your change is $2.03, we will give you $2.05. If your change is $2.22, you will receive $2.20.

Source: nytimes.com

Poll Elected Representatives Reflect

Thanks to all that voted.

138 Voted

The Voice of the People (1)
The Voice of Money (63)
Self Service Interests (74)

Looks as if political leadership has at least a public relations and most a confidence problem with the people they represent.

Likely gridlock in Congress could threaten economy

Economic growth based largely on stimulus and quantitative easing (currency devaluation) is a media-driven illusion. Real or growth adjusted for currency devaluation is driven by market forces such as competitive advantages, geographic proximity to supply and demand, political stability, capital flows supporting investment in physical and human capital, etc. While the form and confidence in centralize government plays a role in attracting capital, but its spending programs can support sustainable growth without unintended consequences.

There is no such thing as a free economic lunch. Centralized stimulus and quantitative easing, regardless of their official intentions, carries a direct and indirect price. It’s the indirect price, in the form of currency devaluation – reduced purchasing power of salaries, wages, and incomes that seems to always elude the public.

A standoff between the Obama administration and emboldened Republicans will probably block any new help for an economy squeezed by slow growth and high unemployment. Congress might also create paralyzing uncertainty for investors and businesses by fighting over taxes, deficits, health care and financial regulation.

Source: finance.yahoo.com

Fed Puts Stamp of Approval on Riskier Assets

Despite a very good PR department, the Fed is still a player not a maker of the markets. The failure of leadership to engender confidence in fiat currencies, in effect neglecting to place their own stamp of approval as interpreted by their actions, has made these currencies riskier to hold. This neglect has forced capital to seek the safety of what the media has ironically deemed “riskier” assets.

The Federal Reserve is expected by investors and economists to announce a second round of bond purchases, or so-called quantitative easing (QE2).

Investors need to understand that QE2 will have a major influence on their investments. The most important aspect is that quantitative easing will help fuel a demand for riskier assets.

Source: finance.yahoo.com

Copper Rises Most in Three Weeks on Chinese Manufacturing Data

The talking heads provide the easy "reasons". Meanwhile, capital which is neither limited by short-term explanations nor the fog of ignorance or denial continues to follow the secular trends.

Copper prices in New York rose the most in three weeks as manufacturing accelerated in China, the world’s biggest consumer.

Source: businessweek.com

There's More To Price Then Supply and Demand

It’s certainly not dollar positive, Jim

I caution fellow CIGAs not to focus on home prices as a proxy of health not only for the real estate market but also the economy in general. Traditional economics suggests that price represents the equilibrium, the clearing mechanism so to speak, that matches supply and demand.

Price, however, is also a function of confidence in the currency that denominates the transaction. Price can be heavily influenced, yet seldom recognized, by waning confidence during periods of aggressive currency devaluation.

The median home price is often presented as a representation of the health within the real estate sector and by extension health of the economy has been rising steadily since 1963. The chart even suggests, despite headlines suggesting lower prices, the 2007 downtrend could be breached in late 2010 or 2011.

U.S. Median Home Price (MHP):


Price, however, can be heavily influence by waning confidence during periods of aggressive currency devaluation. Rising home prices cannot be misinterpreted as an all clear sign as long as the policies of currency devaluation, better known as quantitative easing, are used to support the failing dollar.

Capital is not stupid. The inverse correlation of gold relative to major fiat currencies has tightened considerably since 2000. As confidence in paper wanes, demand for gold has increased.

Gold and US Dollar: Major Currency Index Change (YOY)


When home prices are adjusted or priced in a stable currency such as gold, the US dollar trends are radically changed. The “real” secular trends, down, are clear as day.

U.S. Median Home Price (MHP) to Gold:


Why are they down? The lending machine of securitization that brought home ownership to record levels in the United States was completely dismantled in 2008-2009. Residential and commercial real estate growth rates and contribution to total credit creation has been contracting steadily since then.

Breakdown of Commercial Bank Credit


Restricted access to credit, job loss, and income stagnation are not supportive to rising home prices. Home prices, nevertheless, remain stubbornly sticky because of the overwhelming influence of currency devaluation or quantitative easing.

The robo-signing controversy is just another issue that the already sluggish housing market didn't need -- but most analysts do not think it will have far-reaching impact.

Nevertheless, the housing market still faces many problems: a weak economy, sluggish hiring, tight mortgage underwriting, falling home prices, and slowing sales.

Fiserv, a market analytics company, has scaled back its home price projections considerably. In February, it forecast national price gains of about 4% through the end of 2011. The company's latest prediction is for a 7.1% drop in prices between June 30, 2010 and June 30, 2011.

Source: finance.yahoo.com